There’s a low bar for Nike’s (NYSE:NKE) FQ4 results after the close on Thursday and the stock’s performance reflects investors’ lack of enthusiasm for the stock given anemic innovation versus rivals and emerging popularity of brands like Adidas (ADDYY, ADDDF), HOKA (DECK) and On (ONON), all of which continue to steal market share from Nike (NKE).
Wall Street will be laser-focused on the company’s FY25 guidance and revenue growth, which is expected to slow to +1% for the fiscal year ending May versus 9.6% the year prior, the slowest growth in sales in more than 20 years. The Street is forecasting FY25 EPS of $3.86 on $52.1B in sales.
“There are warning signs that earnings are headed down that lends credence to pessimistic scenarios,” Seeking Alpha investor Shri Upadhyaya says, noting that when looking at Nike’s earnings revisions for the upcoming quarter, “the number of up revisions is only one for EPS and two for revenues, whereas the number of down revisions is 12 for EPS and 14 for revenues!”
Investors are all too aware that the company is facing several hurdles in regaining its standing as the darling among sports enthusiasts. Innovation is a lingering problem now that Adidas (ADDYY, ADDDF) has leapfrogged over Nike (NKE). And now runners are feeling neglected with New Balance, Mizuno, Brooks, HOKA (DECK), and On (ONON) swooping in on the gap left by the company that gained fame with the “Oregon Wafer” worn by legendary distance runner Steve Prefontaine.
CEO John Donahoe has acknowledged Nike’s (NKE) shortcomings and pledged a commitment to refocus on sports over fashion, turn around its running category, and capitalize on the Paris Olympics to highlight the brand’s popularity among elite athletes.
Nike will do what it’s always done, Donahoe said, “take bold moments of disruptive innovation, combine them with major moments in sports, and then use that as a launching pad for delivering that same innovation to consumers.”
Nike’s (NKE) Alphafly 3 will be on the feet of marathoners this summer, and hopefully for Nike, the gold medalist. The company hopes that if athletes embrace the shoe, everyday runners will follow.
Nike reports FQ4 results after the closing bell on Thursday, with its earnings call at 5:00pm EDT.
